Capitalism in Evolution
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Capitalism in Evolution

Global Contentions – East and West

Edited by Geoffrey M. Hodgson, Makoto Itoh and Nobuharu Yokokawa

Contributors to this volume argue that to understand capitalism in evolution, this diversity of systems and approaches must be taken into account and their individual evolutions analysed. This book represents a major understanding of the evolution of capitalism in the twenty first century and brings together a distinguished group of experts with perspectives from America, Europe and Japan.
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Chapter 8: Where are the advanced economies going?

Robert E. Rowthorn

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8. Where are the advanced economies going? Robert E. Rowthorn INTRODUCTION This chapter examines some of the major trends now affecting advanced economies.1 It deals with the rise and fall of manufacturing employment, the continued importance of manufacturing production in advanced economies, emerging trade patterns and the rise of transnational corporations. Because of limited space the policy implications of these developments are considered only very briefly at the end. ECONOMIC DEVELOPMENT AND STRUCTURAL CHANGE2 In the course of economic development, the structure of employment undergoes the following changes. There is initially a phase of ‘industrialization’ during which the share of agriculture in national employment falls rapidly, and the labour thereby released is absorbed into the service sector and into industrial activities such as manufacturing, mining and construction. As growth proceeds, the service sector continues to expand and agriculture continues to shrink. However, after its initial increase, the share of industrial employment stabilizes and then starts to fall back again. This new phase is known as ‘deindustrialization’. Most advanced economies reached this turning point during the 1960s, and they have been joined more recently by East Asian countries, such as Korea and Taiwan, where the share of manufacturing has been falling quite fast during the past decade (Figure 8.1). Explanations for the declining employment share of manufacturing in advanced economies can be classified under the following headings: G G demand; productivity growth; 125 126 Global paths of capitalist development 40 35 30 P 25 20 15 1960 1962 1964...

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